Unit 4 Economics and Personal Finance

Authority Bias

The tendency to attribute greater accuracy to the opinion of an authority figure and be more influenced by that opinion.

Bond

A security in which the investor loans money to a company or government, which pays regular interest to the bondholder and returns the principal at maturity.

Brokerage Account

An account that allows individual investors to trade stocks, bonds, mutual funds, and other investments.

Capital Gain

Profit from the sale of an asset, calculated by subtracting the initial purchase price from the selling price.

Comparison Shopping

The process of comparing various factors for a product or service before purchasing.

Confirmshaming

A dark pattern where the option to decline an offer is worded to shame the user into compliance.

Diversification

The practice of investing in a variety of stocks, bonds, and/or funds to reduce overall risk.

Dividends

Money from a company's profits paid out to shareholders, typically on a quarterly basis.

Exchange-Traded Fund (ETF)

A collection of stocks and/or bonds traded on securities exchanges, traded throughout the day like an individual stock.

Federal Trade Commission (FTC)

A government organization that protects consumers and competition by preventing anti-competitive, deceptive, and unfair business practices.

Identity Theft

When someone steals your personal information to commit fraud, such as applying for credit or obtaining medical services.

Influencer

A person who generates interest in something by posting about it on social media.

Index Fund

A low-fee portfolio of stocks chosen to track or mimic a stock market index.

Mutual Fund

A collection of stocks and/or bonds combined into one fund, typically managed by an expert for a fee.

Philanthropy

Actions that promote the well-being of others, often through monetary donations.

Phishing Scam

A scam in which personal information is requested, typically through an illegitimate email.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents.

Rule of 72

A method to estimate how many years it will take for an investment to double, based on interest rates.

Pyramid Scheme

An illicit business model where profits depend on recruiting others to make payments, often without delivering a product or service.

Rate of Return (ROI)

The ratio of money gained or lost on an investment relative to the amount invested.

Roth IRA

An individual retirement account that allows after-tax income to be set aside up to a specified amount each year.

Scarcity Bias

The tendency to assume that things that are scarce are valuable, while abundant things are not.

Social Proof Bias

The tendency to behave in a particular way because others are doing so.

S&P 500

An index of 500 large cap companies, used to represent the entire market.

Stock

A share of a company's value that can be bought, sold, or traded as an investment.

Traditional IRA

An individual retirement account that allows pre-tax income to be set aside up to a specified amount each year.

Traditional 401(k)

A retirement savings plan sponsored by employers that allows individuals to save for retirement with tax deferral.

Plan

A method or scheme developed in advance for acting, doing, or proceeding.

Ways of Influence

Factors such as authority, liking, or scarcity that affect decision-making.